Page 54 - Nanyang Technological University

NOTES TO
FINANCIAL STATEMENTS (CONT’D)

31 March 2015

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)

2.14 Lease payments

Payments made under operating leases are recognised in the profit or loss on a straight-line basis over the
term of the lease. Lease incentives received are recognised as an integral part of the total lease expense,
over the term of the lease.

Determining whether an arrangement contains a lease

At inception of an arrangement, the Group determines whether such an arrangement is or contains a
lease. A specific asset is the subject of a lease if fulfilment of the arrangement is dependent on the use of
that specified asset. An arrangement conveys the right to use the asset if the arrangement conveys to the
Group the right to control the use of the underlying asset.

At inception or upon reassessment of the arrangement, the Group separates payments and other
consideration required by such an arrangement into those for the lease and those for other elements on
the basis of their relative fair values. If the Group concludes for a finance lease that it is impracticable to
separate the payments reliably, then an asset and a liability are recognised at an amount equal to the fair
value of the underlying asset. Subsequently, the liability is reduced as payments are made and an imputed
finance charge on the liability is recognised using the Group’s incremental borrowing rate.

2.15 Prepaid lease

Prepaid lease is recognised in the statement of financial position and amortised to profit or loss on a
straight-line basis over the term of the lease.

2.16 Finance lease receivables

Assets held under finance lease are recognised in the statement of financial position and presented as
receivables net of unearned interest and after deduction of allowance for possible losses.

2.17 Key management personnel

Key management personnel of the Group are those persons having the authority and responsibility for
planning, directing and controlling the activities of the entity. The Board of Trustees and senior management
team are considered as key management personnel of the Group.

2.18 New standards and on interpretations not yet adopted

At the date of authorisation of these financial statements, the following FRSs and amendments to FRS
that are relevant to the Group and the University Company were issued but not effective:

(i) Improvements to Financial Reporting Standards (January 2014)
(ii) Improvements to Financial Reporting Standards (February 2014)
(iii) FRS 109 Financial Instruments

Management anticipates that the adoption of the above FRSs and amendments to FRS in future periods
will not have a material impact on the financial statements of the Group and of the University Company in
the period of their adoption.

52 NTU ANNUAL REPORT 2015